Sanctions compliance and enforcement – a global update

2017 promises to be an interesting year for US and European Union (EU) sanctions enforcement. The new US administration has stated that it is reconsidering the recent easing of sanctions against Iran and Cuba and many are speculating about the future of Russia and Crimea-related sanctions.

There is no need for speculation, however, when it comes to the seriousness with which US and EU authorities are currently enforcing their economic sanctions programmes. The trend at the Office of Foreign Assets Control (OFAC) is to investigate and pursue penalties against the full spectrum of violators, consistent with the regime it administers. Already this year authorities in the US have announced a record-high combined civil and criminal penalty of $1.19bn against Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd. (collectively ZTE) for selling telecommunications equipment to Iran and North Korea in violation of US sanctions and export controls. At the same time, many recent OFAC settlements show that the agency is routinely penalising lower value transactions, even when they involve inadvertent acts of negligence. More than ever, it is clear that regulators expect all businesses to demonstrate their commitment to compliance.